Theory and India
There are many theories and claims concerning the agricultural sector of less- developed countries, the structure of their village economies, and the behaviour of the participants in these economies. The purpose of this chapter is to expound, discuss, and occasionally develop certain of these theories so that in later chapters we can use them to help understand some aspects of Palanpur and comment on them in the light of the experience of Palanpur. We shall also describe some observations and propositions which have been made concerning Indian agriculture and its recent history insofar as the data from Palanpur allow us to contribute something to the discussion.
Our primary interest is in the allocation of factors of production and it will be convenient to divide our discussion into land, labour, and capital. We wish to examine the allocation of factors between activities, individuals, and groups. We must remember, of course, that markets cannot be considered in isolation. A discussion of share-cropping, for example, leads immediately to an analysis of land, labour, and capital markets and decisions, since a bargain between tenant and landlord will usually involve an understanding over the level of several inputs. The importance of a simultaneous examination of the various markets is a theme which will recur.
We shall take a fairly broad view of the definition of factors. We include migration in the discussion of labour, and irrigation and fertilizer under capital. Draught animals and power are examined together with land. We begin in § 3.1 with an examination of certain general views of the manner in which a village economy, or the economy of a less-developed country, operates. The second, and largest, substantive section of this chapter concerns land. The disposition of land must be at the centre of the study of an agricultural economy. Further the nature of the contracts governing the use of land, particularly share-tenancy, has been a popular subject with theorists both recently and amongst classical writers such as Smith, Ricardo, and Marshall. We discuss certain theories of the determination of wages and the allocation of labour in § 3.3 and examine capital inputs such as irrigation and fertilizers, and the nature of credit for their use, in § 3.4. In the course of our discussion of theories of factor markets we shall consider a variety of assumptions about the objectives of agents and we focus attention on this issue in § 3.5.
The second part of the chapter is particularly concerned with observations and propositions concerning India. In § 3.6 we examine the arguments of Hopper and others who have studied the question of efficiency by estimating agricultural production functions and comparing the value of marginal products to prices. The debate on farm-size and productivity is summarised in § 3.7. We provide, in § 3.8, a brief discussion of the geographical and historical variations in India of the form of share contract and in § 3.9 we present a